Structuring a Global Treasury Team with Felix Warmuth

Hello, it's Mike Richards here from the treasury recruitment company. I hope you're enjoying the Treasury Career Corner. If you are great news, perhaps you give us a rating on itunes or wherever you consume your podcast content. This means that even more treasury professionals can benefit from finding out or by finding out about how treasurers have achieved their career goals. The link to rate our show will list at the bottom of our show notes. And please remember as well, the show itself is as much about you as it is about us. There are specific questions you want us to ask or there's feedback you want to give. Please drop me an email. My direct email is mikeresuryrecruitment.com inventibly enough, but anyway, that's enough from me. Let's get on with the show. So welcome to this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each week I talk to treasurers about how they started and built their careers, where they are now, and where they see both themselves and the treasury profession. Going to next this week's show, I'm delighted to be joined by Felix Valmouth, the head of treasury at RHI Magnacita. They are a global leader in factories. They have the largest number of locations around the world and most innovative reliable products, as we will find out shortly. I'm going to let Felix explain a little bit more about what they do, but they're listed on the London Stock Exchange, but actually based over in Austria, so you can look them up if you like. As I said to Felix, before we started the show, I used to give a big intro to Felix and things. Actually he can do it much better than I can. Felix, you first started in Treasury a few years ago. Explain for the listeners, if you would, your career and how you got started in treasury and bring us up today.

Thank you very much, Mike. Very, very honored and excited to be here and to talk to you about treasury and about the future of Treas. How did I get into Treasury? Actually, probably as most of the treasurers, I started Business Administration Economics. My first job was not in treasury, but it was in credit risk. So I started at RHI ag, which is actually one of the companies that then merged into RHI Magnacita in the credit risk department and then also headed the credit risk department a couple of years later, which is basically doing all the operational credit risk in terms of doing your credit risk insurance for your receivables, handling all the factoring topics, and also the trade finance area was also part of my responsibility. We split a little bit over to treasury and probably three or four years later I then took over also the treasury responsibilities. Also right now I'm heading both departments, the Treasury Department and the credit risk department. So treasury is basically everything what you would think about a traditional treasury is doing like external financing, internal financing, cash management, foreign exchange risk or every kind of risk management. Also interest rate swaps and those kind of things. So I'm now probably in like treasury, what you would call traditional treasury for like six or seven years. So what do I like about it? I mean it's very, very exciting for me and I like to work into treasury because it's just not, it's not exactly clear what are the boundaries of Treasury. Right. It's not like a closely defined area like for example accounting because you know where accounting starts, you know where accounting ends. Right. But for treasury it's a good mix because you have to do you have a lot to do with your internal clients, with sales, with your other finance areas or also with operations. But you also have your external view when it comes to banking to investors and that kind of thing. So I think it's a very, very good mix and very, very, it just doesn't get boring. Right.

And when you have. So a number of our listeners, they obviously some work in service industries, some work in, you know, similar companies to yourselves. Explain for the listeners if you would, refactories, you're the driving force of the refractory industry, as you say. What does that mean? I mean you've got this, you know, you're absolutely massive. And how does that then impact on your role as treasurer? Because obviously you're a product based company, commodities, all those things. But just explain the industry and then how that sort of links into your role as treasurer, if you would.

Sure, sure. I mean, I guess as you rightly said, probably some or even most of our listeners have never heard of refractories, at least indirectly. You have to deal with refractories every day because without refractories you wouldn't have a car to drive in. Without refractories you wouldn't have a market to drink your coffee out of. Or without refractories you wouldn't have a glass that you could drink your wine out of. Right.

Because refractory is drink your beer out of. Hello, please, whatever wine. Thank you very much.

But actually refractory is a material which is based on magnesite or dolomite. So the raw material is magnesite or dolomite and it's a very heat resistant material. You can think about it. For example, if you think about melting steel, you melt steel in a steel furnace. Right. So what would happen? The furnace would melt as well. Right. You need a very heat resistant material which is refractory. So every, for every, for every process where you have temperature above, 1200 degrees, you need refractories which are basically like an isolation area in a furnace that the furnace itself doesn't melt. So you need refractories for all high temperature processes, which is mainly steel, but also cement and lime glass. Every non ferrous material, but also for some kind of applications in the petrochemical industry, for example, we do the whole value chain. Both companies, RHI and Magnesita that merged in 2016, both companies actually started as a mining company going back to 1834, which is one of the first plants set up in Germany at that time. And the companies evolved through mergers, through acquisition over the last decades and then finally in 2016 merged into RHI Magnesita, which is now global leader in the refractory industry.

We talked earlier about a question I had for you that RHI Magnacita are based in Austria, headquartered there, but virtually all of your revenues are everywhere else and you're listed in London. We talked about this before the show, but explain perhaps for the listeners, you know where your main markets are and you know how you approach that.

Totally true. Probably 90, 99 or 98% of our revenue is, is done outside of Austria. The headquarter could be anywhere. It is just out of history. It is. There are actually going back to the mining origins company. There are only a few places in the world where you have Magnesite, which is one of the very important raw materials. So you have it in Brazil, you either have it in the Alps, you have it in Turkey and you have it in China. That's where the Austria came from. Just from the origins of the company being also a mining company. Actually right now, as you said, doing our business all over the world. Actually our biggest market is the US and actually our four biggest markets are in four different continents. The first one is us, the second one is Brazil, the third one is India and the fourth one is Germany. So as you see, we're very diversified all over the world, servicing 10,000 customers from Chile to Japan. So we're pretty much everywhere you can imagine.

Yeah, but you're spread around in those four massive pockets of where the big industries are and things. And then as that then feeds into your role as treasurer, how do you find it? It's a Global company, you're based in Austria, you've got to deal with maybe the Far east in the morning throughout Europe as you move through the day. And then US or how are you structured within treasury terms?

Yeah, true, true. So it's a little bit as you said, I mean, as we have like a lot of companies, especially in Austria, very Eastern Europe focused, right. Just because of also the regional aspects, which we are totally not. Right. So we are pretty much all over the world and especially that diversity makes it very, very interesting to work with different regions, to work with different countries. Also then when you look at the treasury banking of thing, right, it's very important, especially being that international as we are, it's very important to that your banking relationship, your core banking footprint fits to your footprint, right? Because it could be that one day you need some, some somebody who can help you in China and then the other day you need somebody helping you in the US or in Brazil. So this is a very important topic, which actually also makes it very interesting.

And when you say that, what's the biggest challenge would you say of dealing globally? Is it that dealing with the local banking partners and getting stuff in place or is it the local partners within the group or within each of the countries, it's the local suppliers? Where are you seeing the challenges that then sort of feed up the chain to you, as it were?

I mean, I think it's two things. First, as you rightly mentioned, is having, as we talked about already, is having the right banking relationship that could help you out everywhere in the world, which is actually one very important thing that we focused on during the last year. So after the merger of. Exactly setting that up, right? Because you will have constantly topics arising, financing or risk management topics all over the world. And you need to have your relationship set up in that way. The second thing is also the cultural difference. It's not speaking here about the banking stuff, but actually speaking internally, right. It's different to talk to somebody or to negotiate somebody in the Germanic world, right. We're very straightforward in a dramatic discussion. You have no small talk. You start immediately, right. You tackle the issue and start to get it done. It's very different for when you talk to somebody in India, for example, right. We're very big. That's just a different kind of negotiation, a different kind of discussions. It's culturally very interesting, the setup of.

Treasury for you guys. Obviously you're heading up. How are you organized on a local and global scale for the group within Treasury?

There's what we are doing, what we have started already and pretty much every central function, we try to focus on the real core corporate topics, right. So basically taking what you would call from execution to analytics, right? So basically saying okay, you, what do you focus on? The corporate function, which is the thinking, what is, what is the strategic thing? So basically the heavy lifting and everything that is transactional or that is purely executional, we are actually having internally outsourced into what we call global Business services, which is some kind of regional shared service center where we are bundling all transactional activities. That's not only true for treasury, that's also true for example for accounting where you put your accounts payable, your accounts, accounts receivables there also for tax or for every other area that is something that we are focusing on very much on and I think is actually also the future where Treasury Department will go to or will lead to is purely doing corporate strategic, heavy lifting kind of thinking stuff. Right.

In terms of staffing, in terms of structure, do you have like two or three different centers or.

Right now we have pretty much two areas that we are focusing on. On the threshold regionally, we have one team here in Vienn which is on the treasury side, a team of four and we're additionally having a team of two based in Brazil. We of course had a lot of banking stuff, a lot of financial instruments in Brazil in place. So that's why we have a local team in Brazil dealing with those kind of things. But basically everything is run out of either the team in Brazil or the team in Vienna.

So you're fresh to Treasury. And to put that in context, some of the guys I've been speaking to have been in Treasury 25 years. I've been in treasury recruitment 20 odd years. You've been in treasury seven years. So sometimes when I say to people, I say, oh, you know, what was it like when you first started? I interviewed Royston da Costa recently and he was one of my first clients many years ago and he and I talked about how it had changed and we've talked this, this thing called a fax machine and various other bits and stuff.

I can remember that.

Oh yeah, exactly what you saw in a museum. I know. And your dad told you about it. But more than that is so you're relatively fresh. You've been seven years within treasury going on that. Have you seen, you know, when you got in there you were seeing it personal credit and then you seen treasury and obviously is evolving the gathering pace of things. But where do you, where did you see it and where do you see it going in the future and things.

Even though I'm, as you said, fresh in terms of doing it only for seven years, I think I saw quite evolvement during that period. Right. And I think you evolve in terms of a Treasury from like being the guy who is doing the. Who is doing the calculations on your financing topics, who is working at his desk somewhere where nobody finds him or somebody or in the basement or whatever. Right. This is going away and it's going actually moving into way more business partner kind of, kind of area where we actually supporting the business and doing way more interactive things than you did, for example, Otto, when I started seven years ago. Right. Because you actually have to think about that. I mean the purely technical things that you did, like I don't know, your FX hatching, for example, so the execution of it, I mean pretty much there is either somebody who can do it cheaper than you, especially for us being in Europe, or also in North America, right? There will be somebody who can either do it cheaper than you or somebody who can do it better than you. Like a robot, for example. Pretty sure it is not the area we are focusing. We should as a Treasury focus on the other things like being a business partner, supporting the business, be it for the sales side or for all M and A projects or discussions with the board, discussion with the audit committees. Audit committees are basically providing strategic advice that also supports the business. Like also giving input to the capital strategy, how to efficiently use company's capital, for example, like your working capital. So where does a company invest its capital in? And of course also then because treasury is something that is I think on the forefront of the digitalization. Because just look, I think treasury is pretty much the first area in a company that used things like 360t like Bloomberg, like all those digital things that started on the treasury side. So I think we're also part of the area that should actually drive those digitalization and those innovations also going further.

Do you think that's because Treasuries are the front of things? Because I say to people when I try and explain what I do people, you sell treasury recruiter. Do you do stuff for the government? No, I don't. I do things with corporates and things. And then you know, that also happens.

To me if somebody asks me where you work and then I say I work in treasury. And I think everybody thinks I'm doing.

Taxes or whatever working with the local government.

You're like no, yeah, something like that. Yeah.

But then you. Well then I explained that. So you've got a tax guy who's moving the money around and trying to save, you know, lots of, you know, stuff into company and everything else. You got the group financial control looking at today's finances and backwards and then you've got the treasury guys looking today and for the future and the forward. And do you think that's. If you like, because you're at the front of things. That's when you're the sort of buffer, you know, that all this technology is coming down and you know, people talk about we've got blockchain, we've got all the other things, you've got everything coming. Is it. Are you finding yourselves being, becoming a filter maybe for, you know, for those, for the, for the CFO maybe and looking at those things and what's going to work and what's not going to work, do you think?

Yeah, definitely. I think, I think that's the, I think that fits it pretty well because I mean, just look at the banking world, right. And this is an area that changed radically over the last, I don't know, five to 10 years. And pretty much what is banking. Banking is people and it's, that's pretty much it. Right. And it gets even, gets more and more important, right? Because more and more gets automatic, get digitalized, gets into the IT area. Those, those are actually the areas that banks are focusing on right now. Right. Where they are spending their money on. Mostly on it. Oh pretty. Probably also on compliance, which most of the, most of the treasurers, most of the treasurers probably don't like to hear. But unfortunately that's what it is. It is one of the industries probably of E commerce or something like that, where it's further ahead, but especially in the industrial area. So like an industrial company as we are. Right. I think this is one of the touching points to a very digitalized industry which is the bank which is and is even getting more and more the banking industry.

And looking to the future with you as you continue to develop what's your ethos, what's your key to success, if you like. How are you seeing your future as the treasurer of the group?

I think for me, as a Treasury within rhi Magna Sita, after the merger we did a lot of harmonization of processes, redefined policies, discussed it with ESC in terms of what is your risk appetite of a company. So this is pretty much what we did, which I would call is the foundation. What comes next is actually probably the grind, so to say. Right. Because what we did is probably, I don't know 60 to 70% of where we want to go. But actually the last 10, 20 is the thing that is the most kind of work and is actually the grind of doing those more detailed things. I mean some things that we focus, that we want to focus on going further down the road is especially on working capital, working capital solutions. I think this is a very important topic for us, especially being an industrial company. Right. There's a lot of focus on accounts payables, on accounts receivables, on working capital and also on inventories. And that's one important area in terms of looking how to effectively and efficiently use your working capital to further also support the company's growth. And I think one important one thing probably that's on the agenda of a lot of Treasuries is also the digitalization of cash management. So speaking about payment factories having a system support, especially for us, as we are in so many different countries, you can imagine how many hundreds of banks account we have with different banks. So this is like a very key area that we want to focus on going further. So this is as I said, looking back at the merger, this is pretty much the icing on the cake. You want to focus on down the.

Road looking at that digitalization and the structure of the team and things and the support they give you. You said you got a team of four in treasury within Austria. Do you then prescribe out the response? You're focusing on working capital. You're our systems guy or girl. How do you diffuse responsibility to those or how are their roles structured? And as a treasurer. Right. I want to do it this way or what's the structure there?

Like I spoke about earlier, that credit risk department is part of my responsibility. And the accounts receivables factoring kind of working capital solutions are actually within that department. Right. So we have a separate department not only but also focusing on factoring on account receivables, financing on all your trade finance topics. And the treasury department itself is more, more on either the financing topics or the cash management and risk management topics. If we look at what I said earlier about our areas focus on there would be the working capital. Accounts receivables part would actually be more of a credit risk responsibility in my team. But everything that comes to the digitalization of cash management, payment factories and all those kind of things would be taken over by the treasury team. Going further, we have to see where we're going regionally. It could be that we also need some support in those regions.

What's your sort of strategic plan for.

Treasury One key phrase you already mentioned, I mean, it is digitalization, right? Everybody's talking about, no matter to which conference you go, you hear about automation, you hear about digitalization. And there, I think is one topic very important. It is the big data kind of question. And this is actually one area to focus on in terms of you get a lot of information, how do you, how do you deal with it, right? And this is, then there it comes in the recruiting area. So actually it's something that also you are, you are focusing on.

I'm very happy with this bit. I'm liking the way this conversation is going.

There's, I think this is a very important, very important area because you get so much information and it doesn't get, it doesn't get less, right? You will get more, that we will get more data. Like, think about, if you, if you do some kind of digitalization of your payment factory, think about how many information you, how much of that kind of information you will get. So actually going into what you need to have as a treasurer going forward is one key area, is having analytical skills. And analytical skills, I'm not talking about simply having a spreadsheet, working in a spreadsheet, adding up columns or doing vlookups or whatever. That's actually a technical skill, right? But what I mean with analytical skills is dealing with lots of information, but dealing with imperfect information, right? Because you will never get it 100% and you have to analyze it, draw conclusions out of it, and also interpret the data. So actually deal with, deal with not only the big volume of it, but also with the speed and the speed of the change of it, and then come up with solutions to a mostly very complicated and complex problem and also getting the key statements out of it, right? So I think interpreting data, analyzing data will get more and more important going further down the road. So actually being analytical is one of the key areas that you need for your treasury career or when you want to start a Treasury career, going in the future. The second one, which is important and which you have to have both actually is being communicative, right? Because you shouldn't be the one just doing the analysis and not being able to communicate it. This is actually one key area, right? You don't need the nerdy guy just doing the calculations. You need the one doing the analytical stuff, analyzing data, interpreting data, drawing conclusions, but then also having at the same time the skills to be able to communicate and explain a complex situation and also transfer a complex situation, a complex problem in understandable way to everybody, right? To the board, to the audit committee, to your stakeholders, to whatever. Right. So I think those. Those two, I would think, is, if I look going further, what is the treasury, what are the two skills I would need for when I recruit a new treasury guy? It would be being analytical and being communicative, those two things.

So when you're looking for someone, you're looking for someone that's able to analyze and assess big data, lots of flows coming in, and then translate it into real words, the common language that is understandable, and you pass on to CFOs and other people. If I'm interpreting that right, translating myself, how do you assess that? How are you, you know, someone walks in the door, oh, hang on, let's look at your CV resume. Have you got this? Do you, you know, have you shown this? Because how many degrees are you going to get where, you know, that's a big part of it, analyzing big data and things like that, or, you know, demonstrate this, you know, if you're relatively new to treasury and things, and, you know, don't want this to be a trick question, but how would you assess that? What would you use? What tools in your mind would you. To look at, you know, when you're.

Recruiting that person from educational experience or professional education? I wouldn't overvalue that part. So I wouldn't overvalue in a recruitment interview, having a ACT or a CFA or whatever. Especially. Especially considering if you had that degree or if you did that degree 10 years ago, probably it's pretty much worthless right now.

Say all degrees are worthless, but what you've done since then, that's what we're saying. So.

Yeah, yeah, yes, definitely.

That's not caveat.

I would overvalue professional experience compared to educational experience. This is something I would value very much.

As we come towards the end of today's interview, where do you see the future of Treasury? And we'll then move on to perhaps someone, if they wanted to sort of look at your background and work in a similar role, we'll get you to talk about you. But where do you see treasury going from here? We've talked about being this analyzer of big data translator, getting it forward, and that's what you do, that's what you're doing effectively, and someone could do that. But how do you see. And to put that in context, I've had some guys say, oh, it's all about it, it's all about that. I've then had other guys said, it's all about communication, it's all about actually moving up the value chain being much more strategic and you use that as your foundation. But where do you see treasury adding value in the future?

Yeah, so I think I would agree to the latter, what you mentioned. So I think the key is being more being strategic, doing the thinking, going away from the transactional part, from the execution part to the analytical and strategic part, driving the innovation, driving the digitalization. And I think what does it mean for teams? I think for teams it will mean that you have to be very agile, very flexible, very forward looking, very solution and output oriented compared to like simply being process oriented. Right. So I think you have to, you have to focus on the problems and bringing solutions, strategic solutions to a problem. I think it is something like.

Sorry, I'm going to interrupt that you say strategic solution. You know, these are great words. I see a lot of these on people. I'm a strategic solution provider. So what, you know, what does that mean? You know, what do you mean by a strategic. I think I know what you mean. But maybe for some of the listeners when they're saying, you know, what is it? What is a strategic solution, you know, or give us, you know, maybe an example or where are the challenges that your CFO is throwing at you?

Sure. I think a strategic, strategic solution is something that you find or you can, as a Treasury Department, a solution to a problem that you can deal with that helps the company strategy and helps the company's goals to even go further. Like for example, as I talked earlier, if you see a strategic solution would be how do you effectively use your company's capital, how do you use companies working capital to further, for example, to further strengthen the balance sheet, but also, for example, further helping the company evolve, helping the company growing, for example, on an M and a kind of thing or something. So I think it is focusing on the strategic goals of the company and out of those strategic goals, defining your strategic goals for Treasury Department and seeing how can you influence by your decisions, by your task, by your solutions that you deliver on, helping achieving those and.

The contribution you make.

Correct. Definitely.

And just before we move on, there was another question on this. Well, two different things. Number one, you're a treasurer. What keeps you awake at night? Number two, what keeps you in Treasury? What keeps you interested? So sorry for those sort of curveball questions, but you're lying there. Oh God. What about this? What are your concerns for treasury? If you like, what keeps you awake?

You mean concerns in terms of what are the problems to focus on or. I think we pretty much covered some of it already. Right. I think one topic immediately that comes to my mind, what keeps us, probably not only me, but a lot of other treasurers awake at night is the whole situation when it comes to the trade wars, to the regulation kind of things. Right. Because a lot of the success that we had on treasury, on the treasury area in the last decade or so came from centralization, came from bundling funds, for example, centralizing cash flows by doing pooling and whatever. And I think there is a certain threat when it comes to taxation of those flows, when it comes to burdens or regulation in terms of outflows. You know what I'm talking about, right?

Economies of scale, isn't it? Different countries bringing together your services and within.

Right, correct. And there is a certain threat to it when you have your. When you actually de. Globalize. Right. Which is a little bit the political topic right now, which gets more and more international in a very vast area of countries. Right.

So as we wrap up today's show, as I've said before, you can connect to Felix via LinkedIn. We'll put his LinkedIn profile in the show notes, which is great, but someone listens to the show, they love it, they go, see, that's great. I want to work for a factory maker. I want to. Want to be a producer. But I say that because I think it's a really fascinating. And when originally we first. Felix and I first started speaking, even I had to do the research. I mean, I knew a little bit about it, but actually, you know, the global nature of the company and it FTSE 250, I was like, wow, this is an amazing company. So you've got a better understanding. So someone says, actually that's what I want to do. Or I'm a Treasury manager, I want Felix's job. What recommendations would you make to those guys if they're developing, Is it study? Is it, you know, keeping your options open or is it, you know, being open to different moves? We've had a variety of different answers to different treasures. But looking back at yourself, what would you give as the key to success? And blow your own trumpet a little bit. So.

How do you make your profession great? Right? Great. Not again. It is already great. I think my advice to everybody, and this is probably true for all professions, not only for treasury, is I think you have to do what you like, you have to do what you have a passion for, Right? Because that's the only area that you will succeed in. So if you dislike what you do, you will never do it in. You will Never. You never, you will never just succeed, right? Don't pick your, don't pick your profession or your job just by what you think gives you the best chance for a good career. Because this will not, this will not, will not make you happy. And first, first thing, and second thing, you will not be successful if it's not something that you have the passion for, that you have the energy for, that you have to fire for. I think this is very, this is, this is true for every profession. It's of course also true for Treasury.

How did you discover that passion? How did you know that this. Just when you started doing it? You think, oh, this is, I really get this.

It's actually a good question. I think starting even further, even before I did my university studies, I think I was always a numbers guy, that's for sure. So, and also, so like also in high school or whatever, this was just my area that I wanted to, I was good at that I also wanted to do. And then going further also during the university, university studies when you had like, you know, when you do business, administrative, you have a lot of things. You have marketing, you have corporate finance, you have FP and A and whatever, right? So, and I think for me it was pretty clear soon that I don't want to do the marketing thing. That was for sure. There was a lot of talking without actually really having any tangible things, right? So I think that was pretty clear for me soon that the finance that, the cash that those treasury and corporate finance things are my expertise and is something that I want to do. And going then deciding on where you want to go in which industry you want to go. I think it was for me also a question of tangibility, right? So I wanted to have something tangible. I don't think I would be very happy or also successful in, I don't know, one of the big fours or one of the advisors where you pretty much what you do is you do PowerPoint slides, right? And then you actually, at the end of the day you do power up on site for your clients, but you actually never, never know. Did it work? Didn't it work? Because by then you're, you're gone and you're to the next order or actually the one after next, right? So I think this was, this is something that for me was, was important, first of all being, being a finance guy, being, being an analytical guy, as I mentioned before, and then second of all, doing something that is tangible or doing it in an industry that is tangible, that you know, when you do something like for Example, when you do a working capital project, when you do a financing. Right. It is tangible. So you know what you do with it, you build a plan with it, you invest something. So it's just something great that you see. What you. You put in also gives you some kind of output. Yeah, that was just important for me.

So what you put in, you actually get to see the results and actually the difference you make. Not just being a catalyst, but actually I did that. That was part of mine. And making a difference on a global scale with an international corporate.

Correct, correct. And you see, you put something in, you put your efforts in, but also there is something that coming out of it. Right?

Yeah.

Which is not. And which is not a PowerPoint slide.

No, exactly. Much better.

Only a power mode slide.

Exactly. So amazing. Great show. Enjoyed it as always. I've known Felix for a while now and just enjoyed it. It's lovely when we have a conversation like that. We've gone all the way through, guys. If you want to connect with Felix, feel free. But Mr. Valmouth, it's been amazing today. Thank you for your time.

Thank you as well.

And I look forward to talking in the future.

Thank you. Thank you very much for having me. It was a pleasure.

Many thanks.